Bank Relief Packages and Mortgage Holidays

Date Published: 26 March 2020

Article current as of 1st April 2020 (no April Fools jokes are contained – all information accurate)

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With the recent announcements with bank relief packages and mortgage holidays, we are getting a lot questions about who qualifies and how to apply for these.  We are going to keep this page constantly updated as we receive information. 

We recommend you bookmark this page and refer to it over the next few weeks.

What is a Mortgage Holiday?

A Mortgage Holiday means any payments you were due to make on your mortgage are instead added on to your total mortgage.  As an example, if your mortgage is $500,000 and your mortgage payments are $1,000 per fortnight; in a fortnight’s time your mortgage will be $501,000 and you won’t be required to give the bank any money.  The idea is that you can put that $1,000 to another use.

A couple of months ago, mortgage holidays were all but impossible to get.  They didn’t conform to the responsible lending criteria that the bank was required to meet.  Loading debt onto a house over 30 years was viewed as generally bad.  But with the Covid-19 outbreak, banks have temporarily reinstated mortgage holidays.

Will I be required to pay back the mortgage holiday at the end of the lockdown?

We have seen this rumour circulating a lot and it is completely false.  The rumour is that the bank will increase your mortgage over, say, 12 weeks, but at the end of the 12 weeks will demand all those payments back.  This obviously wouldn’t benefit anyone who is unemployed on leave without pay over the outbreak.  The bank will simply adjust your mortgage so you are paying the new debt over the same term.  In the example above, $500,000 mortgage over 30 years would simply be a $506,000 mortgage over 30 years after 12 weeks.

Can I just put my mortgage onto Interest Only?

Yes, most banks are offering the option to put your mortgage onto Interest Only for up to 12 months.  If you can afford it, this is a financially better option.  It will mean your mortgage isn’t getting larger over the outbreak.

Why did it take almost a week for the banks to clearly communicate their hardship process?

The Covid-19 situation is a unique situation that required an almost complete rewrite of bank lending policy overnight.  Hardships have always been a small part of mortgage lending but in the coming weeks, tens of thousands (potentially more) will need assistance and the banks had to adjust for this.  The banks worked 24 hours a day to make sure their new policy was easy to complete but protected customers from unreasonable costs.

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How is my bank dealing with hardships?

ASB

ASB are currently offering Interest Only payments, a home loan holiday or a term extension (up to 30 years) for up to 6 months.Mortgage Holiday: 6 months if income is impacted by Covid-19, 3 months if other Covid-19 related reason

Interest Only: 6 months if income is impacted by Covid-19, 3 months if other Covid-19 related reason

No LVR restrictions on eligibility (ie; >80% LVR are able to receive hardship relief).  If Mortgage Holiday places customer over 80% no additional interest premiums (Low Equity Margin) will be charged.

Clients can move from Interest Only to Mortgage Holiday if circumstances change for the worse

Clients can choose to stop Interest Only or Mortgage Holiday at any time.  Mortgage Holiday will result in a slightly higher repayment.  Customers can request a Term Extension to mitigate this.

Clients can request an extension beyond 3 or 6 months if hardship continues.

The process we have been asked to follow is that if you would like to access the ASB packages you need to contact them directly 0800 803 804, or through internet banking, be aware there will be a delay.

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Sovereign Home Loans

Sovereign Home Loans are following the same criteria as ASB. Their current method of applying for Interest Only payments or a Mortgage Repayment holiday is to confirm in a letter signed by all parties who are guaranteeing the mortgage.  The letter must include

• Reason for the payment holiday
• Timeframe of the payment holiday
• Commencement date

If this request relates to COVID-19, please advise:

• How you have been impacted
• The likely period (if known)
• The industry you work in

The email can be sent to your Mortgage Adviser and they will pass it on to Sovereign for assessment.

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ANZ

ANZ is currently allowing customers to apply for Interest Only payments for up to 24 months (for all mortgages under 80%) or have their Principal and Interest payments extended up to 30 years. 

If a client is already on a fixed term the Interest Only period must match or be longer than the Fixed Rate maturity date.  Thus, if your mortgage rate was due to mature exactly 1 year from now, your Interest Only period would have to be 1 year or more (maximum 24 months).  If clients are fixed for >24 months, a break fee will likely apply.  Please choose very carefully which accounts you apply an Interest Only period to.

Comment from Mortgage Lab: This is not a case of ANZ being difficult.  Their computer system requires that Interest Only accounts are fully paid off and a new account is started.

Click the link below and it will take you to the ANZ hardship page.  You can also call them on 0800 240 438.

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BNZ

BNZ have created a simple request form to apply for a home loan repayment deferral.  You are offered the choice of a home loan repayment deferral (mortgage holiday) for up to 6 months or Interest Only payments for up to 12 months.  The link below will take you directly to the BNZ hardship/Covid page.  You can also call BNZ on 0800 375 007 to ask them questions.

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Westpac

Westpac are currently offering a “Six month principal and interest payment holiday for mortgage holders and SME customers whose incomes have been affected by the economic disruption from COVID-19”. The process we have been asked to follow is to click the link below and it should take you to the Westpac hardship/Covid-19 page.  You can also contact them on 0800 606 606.

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SBS

The process we have been asked to follow is to click the link below and it should take you to the SBS hardship/covid page, you can also call them on 0800 727 2265.

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TSB

The process we have been asked to follow is to click the link below and it should take you to the TSB hardship/covid page, you can message them through a link on the page or call 0800 872 226.

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Resimac

The process we have been asked to follow is to click the link below or call them on 0800 38 48 58.

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KiwiBank

The process we have been asked to follow is to click the link below or call them on 0800 113 355.

Kiwibank are offering:

• reduction of mortgage payments to a minimum
• extension of mortgage term with possibility to return the term to the original length once the hardship has passed
• Interest Only for up to 6 months
• Mortgage holiday (mortgage deferral) for up to 6 months

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Summary

The banks have information available about how the Bank Relief Packages and Mortgage Holidays work and who can qualify.

If you are still uncertain, please don’t feel like you have to go through this process alone, feel free to contact one of the team as soon as possible.

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